Briefing is underway in the Ninth Circuit (Nos. 12-73257 & 12-73261) on the Tax Court's ruling in Voss v. Commissioner, 138 T.C. No. 8 (2012), that the § 163(h)(3) limitations on the deductibility of mortgage interest are applied on a per-residence basis (and thus limited to $1.1 million of mortgage debt ($1 million of acquisition indebtedness plus $100,000 of home equity indebtedness)), rather than on a per-taxpayer basis ($2.2 million of mortgage debt), as contended by celebrity psychiatrist Charles Sophy and his domestic partner who owned homes in Beverly Hills and Rancho Mirage, California, as joint tenants. From the Miller & Chevalier Tax Appellate Blog:

[T]he taxpayers argue that § 163(h) should be construed consistently with § 121, which limits the exclusion of gain from the sale of a
taxpayer’s “principal residence” to $250,000. Under the regulations,
the limitation is applied on a per taxpayer, not per residence basis.
Section 163(h) defines “principal residence” with reference to § 121.
The taxpayers also argue there is no reason to treat non-married couples
the same as married couples for purposes of § 163(h) because
differential treatment “is consistent with various provisions of the
Code where there is a different result for similarly situated taxpayers
based on filing status.”